Hayden v. Official Hotel R.B. & D. Co.

• Decision Date: 11 July 1890
• Parties: HAYDEN v. OFFICIAL HOTEL RED-BOOK & DIRECTORY CO. et al.
• Court: U.S. District Court — Southern District of New York

42 F. 875

HAYDEN v. OFFICIAL HOTEL RED-BOOK & DIRECTORY CO. et al.

United States Circuit Court, S.D. New York.

July 11, 1890

Louis F. Post, for complainant.

William J. Fanning, for defendants.

WALLACE J.

It appears upon this motion that the Travelers' Publishing Company, a commerical corporation, became financially embarrassed, and its stockholders, at a meeting called to consider its affairs, concluded to wind up the business, and sell its property to pay its debts, and at this meeting authorized the board of trustees to make sale of the whole or any part of the property at public or private sale, as in their judgment should seem best; that the trustees concluded to sell the property at public auction, and after reasonably advertising the sale, and giving notice thereof to all the stockholders, they sold that part of it involved in this action; that many of the stockholders, as well as the trustees, were present at the sale, and after several bids were made the property was struck off to one Jacques, the secretary, and one of the trustees of the corporation, he being the highest bidder; that he bought the property in the interest of a combination of stockholders, who had united to protect themselves when, and not until, it appeared that the property could not probably be sold except at a great sacrifice; and that, immediately after the purchase by Jacques, he transferred the property to a new corporation the stockholders of which consisted principally of those stockholders in the other corporation who had united together.

So far as now appears, the price at which the property was sold to Jacques was all that it was worth, and everything that was done had the approval of all the stockholders except the complainant. Under these circumstances the sale cannot be annulled at the suit of the complainant, or of the corporation, assuming that the complainant represents it for the purposes of this action, merely because the property was bought by one of the trustees of the corporation. He was acting with the assent of those who, being the majority of stockholders, were entitled to represent the whole body of beneficiaries; and the rule which forbids a trustee from purchasing for himself or for another the property of which he is the fiduciary does not extend to a case where he does so with the consent of all interested. The real question in the case is whether the majority stockholders were acting in...